9.5 HRM and New Institutionalism
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The idea that organizations are deeply embedded in wider institutional environ-
ments suggests, according to Powell ( 1998 : 301 ), that organizational practices are
often either direct reXections of, or responses to, rules and structures existing in the
wider environment (Meyer and Rowan 1977 ). JaVee ( 2001 : 227 ) states that:
viewing organisations as institutions means that organisations have a history, a culture, a
set of values, traditions, habits, routines and interests. This contrasts with the economic or
bureaucratic view of organisations that views organisations as formally rational instru
ments for the realization of clearly deWned objectives. Calling organisations ‘institutions’
means that they are not simply black boxes that produce goods and services, but human
organisations driven by emotion and tradition.
Thus, institutional theory combines a rejection of the optimization assumptions of
the rational actor models popular in economics with an interest in institutions as
independent variables (Powell 1998 : 301 ). Processes of institutionalization can be
deWned as those ‘by which societal expectations of appropriate organizational
action inXuence the structuring and behaviour of organizations in given ways’
(Dacin 1997 : 48 ). Selznick ( 1957 ), one of the founders of institutional theory, used
the term institutionalization, to refer to the organizational policies and practices
that become ‘infused with value beyond the technical requirements of the task at
hand’ (JaVee 2001 : 227 ). In general, institutional theory shows how the behavior of
organizations is not solely a response to market pressures, but also to institutional
pressures. These include those emanating from regulatory agencies such as the state
and the professions, from general social expectations, and from the actions of
leading organizations (Greenwood and Hinings 1996 ).
At the beginning of the 1980 s, a group of US-based sociologists presented
themselves asnewinstitutionalists. Academics such as Selznick, Meyer, Rowan,
Scott, DiMaggio, Powell, and Zucker can be considered as the founding fathers
(and in Lynne Zucker’s case, founding mother) of the new institutionalism.
According to Greenwood and Hinings ( 1996 ), the new institutionalism assumes
that organizations conform to contextual expectations in order to gain legitimacy
and to increase their probability of survival. (For an extensive treatment of the
diVerences between old and new institutionalism, we refer readers to DiMaggio
and Powell 1991 ).
In respect of the societal embeddedness of HRM, the contribution made by
DiMaggio and Powell ( 1983 , 1991 ) is particularly important. They state that organ-
izations become more similar with respect to practices and systems within an
organizationalWeld, not only because of market mechanisms, but also as a result
of institutionalization or ‘structuration.’ The concept that best captures the
process of homogenization isisomorphism. DiMaggio and Powell ( 1983 )deWne
hrm and societal embeddedness 173